The First Minister of Scotland, Nicola Sturgeon, has claimed that shipbuilding companies would “win contracts because they are the best at what they do”.
The context surrounding the claim is the First Minister responding to a question by Murdo Fraser MSP, regarding how many ships an independent Scotland would build.
Sturgeon insisted contthat Royal Navy contracts would still come to Scotland if the country separates from the UK because of the quality of work emanating from the nation’s shipyards. The issue with this is two fold, firstly the people ordering would have to want them to be built in what would then be a foreign country. Secondly, they would have to find a way around ITAR legislation.
One side, the Scottish government, say that naval shipbuilding would continue on the Clyde if Scotland left the UK. The other side, the UK government, say it would not.
The SNPs own manifesto however points out that the party want all UK naval work restricted to UK yards. This would exclude an independent Scotland from competing.
This isn’t the first time this claim has surfaced, Ian King, then chief executive of BAE, earlier indicated in a letter submitted to the Scottish Affairs Committee before the Scottish independence referendum that shipyards on the Clyde would likely have to close if Scotland votes for independence. The future of the yards at Govan and Scotstoun is directly tied into the Type 26 frigates and Mr King has said BAE would build the ships at a location compatible with the contract awarding process of the Ministry of Defence.
The Ministry of Defence, the customer referred to above by Mr King, has recently made clear that leaving the UK would influence the ‘location of the build of the ships’.
The full statement was made by then Minister for Defence Equipment, Support and Technology with responsibility for Defence procurement and Defence exports in response to a question from Brendan O’Hara, MP for Argyll and Bute, regarding the Type 26 frigates.
“What I can confirm to the hon. Gentleman is that, had the independence vote gone the way that he and his colleagues would have liked, no warships would have been built on the Clyde, because the United Kingdom Government would not have chosen to build them there; we made that very clear.“
John Dolan, GMB convener at the Scotstoun yard in Glasgow the last time this claim was made, said:
“Listen, I assure you that if we go for independence we will not be building. We have been told quite clearly by the UK government, personally, I have been told quite clearly that will not happen.”
It is well understood in industry that companies based in an independent Scottish state would no longer be eligible for contracts that the UK chose to place or compete domestically for national security reasons.
Aside from the UK not placing tenders for complex warships internationally, there’s also the matter of contracts using US technology. Defence contractors that work with items or technology of US origin are also covered by undertakings given in accordance with the US International Traffic in Arms Regulations (ITAR), under which any change to an existing US export licence requires US State Department approval.
An independent Scottish state would be a third-party country, not covered by existing UK-US ITAR agreements. UK companies would not have authority to transfer items and information that is subject to ITAR licence to their subsidiaries or other companies in an independent Scottish state or to a Scottish national, without US approval, anymore than it could transfer such material to organisations or individuals in other foreign states. Every licence held by companies in Scotland working on ITAR-controlled items would have to be re-approved if Scotland became independent which would take years.
Other than procurement activity undertaken during the World Wars, the UK has not had a complex warship built outside of the UK since the start of the 20th century at least. All the Royal Navy’s new complex warships are being built in UK shipyards and the UK Government remains committed to utilising the strengths of UK industry in this specialist and complex area.
A shipbuilding source who wishes to remain anonymous, told us that:
“We would still be doing the work. We just wouldn’t be doing it in Scotland.”
Scotland would still need a navy right? Up to date facts on what an independent Scotland would operate at sea, let alone what it would build aren’t easy to come by.
This concern was also expressed in evidence to the Committee by representatives of the Confederation of Shipbuilding and Engineering Unions, who commented that “unless an independent Scottish Government could provide equivalent-type orders [there has so far only been an indication that a handful of vessels would be procured], we would be greatly reduced or completely finished as a shipbuilding industry”.
Significantly increasing Scotland’s share of the global naval ship export market would be very challenging. The existing major naval ship exporting nations are: USA, Korea, Russia, France, Germany, Turkey and the Netherlands. These are likely to be joined soon by Brazil and Japan. Servicing and repair of ships takes place in all of these countries plus Chile, and this list is likely to be joined by the United Arab Emirates. Many of these nations benefit from having significant sized navies of their own, with economies of scale supporting competitiveness in the international market.
How many are currently planned?
It stands to reason that an independent Scottish state would certainly see lower domestic demand for defence goods due to a much smaller budget.